Home sales have been increasing but have the average price for a house in California has declined. Clearly the foreclosures have flooded the market. Just a few years ago, many home buyers would get a 1st and 2nd mortgage to avoid having to pay mortgage insurance. These “80-20″ loans were discontinued because so many of the loans defaulted. This is an example of a “high risk” financing program that had a negative impact on the housing crisis.

Once again real estate news remains mixed for California, as home sales rise, but so do new home loan defaults. California home sales rose in December to their highest level since May, according to a report Friday from the California Association of Realtors as the inventory of unsold homes dwindled. December’s sales were up 5.9% from November’s revised figure of 491,590 but were down 6.8% from the revised 558,840 of December 2009. The unsold inventory index for existing, single-family detached homes was 5 months in December, down from 6.2 months in November but up from 3.8 months in December 2009. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

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[...] yearly rise in sales: up 7.3 %. Some foreclosure-ridden states — Florida, Arizona, Nevada and California home sales saw the smallest drops in sales during that time. Distressed sales made up 34% of all sales in the [...]